This web log is a news and views blog. The primary aim is to provide an avenue for the expression and collection of ideas on sustainable, fair, and just, grassroot level development. Some of the topics that the blog will specifically address are: poverty reduction, rural development, educational issues, social empowerment, post-Tsunami relief and reconstruction, livelihood development, environmental conservation and bio-diversity.

The economics of school education

The contradictions between law and practice in the educational sphere have burst into the open with the interdiction of the principals in several prestigious schools. They are accused of taking bribes to admit children. They also stand accused of violating the area rule since 40% or so of the children have to be admitted from households within the 2.5 miles radius of the school.

Free education is desirable and is provided at the primary and secondary levels in many countries. But these countries do not pretend that free education makes for equality of opportunities in education. It may be politically correct to argue that under free education there should be no levy of fees. But there are differences in the quality of the education provided in the prestigious schools in the city and in the large majority of schools elsewhere. The state cannot afford to discriminate in the grant of funds to schools. But if the quality of these schools is to be maintained, they need more funds. So what’s wrong if the parents provide such additional funds?

Nor can these differences in quality be eliminated in the short run. Former ministers of education promised to make Royal Colleges out of outstation schools. They merely sought to fool the people. More money thrown at schools does not make them equal to the best even if it were possible for a cash-strapped government to find the money. Educational achievement depends on the student’s family background as well as the quality of the school he attends, its traditions and much more.

School choice for parents

It was the economist Milton Friedman who in 1958 came up with the idea of school choice. His idea was that instead of the government allocating the school places in state funded schools to those who live in that neighbourhood, the parents should be allowed to choose the schools to which they wish to send their children. That instantly it leads to the problem of scarcity of good schools as parents would naturally want the best for their children. The places available in these good schools are not enough for all seeking admission and this necessarily means rationing of the places.

But how does one ration them? The government decided on an area rule plus a quota for the children of the old boys. But rationing always leads to problems of enforcement. Where the demand exceeds supply there is an opportunity to make money and money will be made. A free market for education like for commodities is also not possible because in a free market allocation is by the adjustment of the price. If demand exceeds supply the price will increase and equilibrium brought about with higher fees for the best schools. But under free education there cannot be a price. So in ‘education’ the `prospective buyers’ or parents who provide the demand are not subject to a price constraint because education is free. The prospective sellers of education - the schools (i.e. government) - are also unable to increase supply because of limited accommodation.

The result is that unlike in the case of goods, when demand increases the supply cannot increase. This is aggravated by the ban on the setting up of new schools by the NGO sector. Most countries allow the private sector to enter the education field. In order to keep the fees within the affordable range for the middle and lower middle classes the governments in several countries allow private citizens to set up publicly or state funded schools. In Australia, Denmark and Holland governments have for a long time financed private schools with state funds. In Denmark 90% of the expenditure in private schools is met from state funds. This enables the schools to levy low fees.

But most countries allow parents to donate money to build and improve their schools. In Japan the public sector schools charge fees although they are about half the fees in the private schools. (Vide Economist of 11/1/92). The best public sector schools in Japan expect parents to make hefty donations. In Britain too, in some state funded schools parents club together to double the amount provided by the local authority for books, computers and other equipment. In Singapore and South Korea too the authorities allow the top schools to collect money for their development over and above the government grants. Why is it a crime to collect donations for the development of schools? Only a hypocritical pretence of egalitarianism makes us oppose donations.

It is not possible to ensure equality in education. It is a chimera. What is required is to spend more money and provide better teachers and facilities to the schools which are poor in the quality of education provided. Education is not a homogeneous good as say a tin of biscuits. Parents know which schools are best and they want to admit their children to them. They want their children to get ahead and are willing to pay to get them into the popular schools since they know that studying in such schools gives their progeny an advantage in the job market later on. But the money should not go to the pockets of the principals but should go to the school fund to be used for the benefit of the pupils. This can be done only if the donations are made official and the money collected by the school and credited to the School Development Board.

Religious versus secular schools

In choosing a school parents also have an interest in the kind of schoolmates their children would have – what kind of kids from what kind of homes will share classrooms and playgrounds with their own progeny. Buddhist parents might want Ananda or Visakha and those parents as well as the old boys (and girls) of these schools will want to preserve their Buddhist character and ethos. They would not want Christians or Muslims who live in the neighbourhood of the school to dominate the school roll. The president not long ago referred to this saying that schools must not exclusively cater to children of a single religion. She wanted state schools to admit children of other religions too. But she forgot that although state schools in developed countries are secular they are not so in our country.

The president, no doubt, meant well since for the purpose of national integration it would be desirable to have at least a certain percentage from minority religious groups in all schools. This was an argument of those who demanded the take-over of the denominational schools and promised admission to persons of all religions to the state schools. But none of this took place and state schools are to all intents and purposes religious schools although run by the state. The state only makes a pretence of being secular. It is time to recognize that state schools are religion based although run and funded by the state. At least in the case of the old Buddhist schools taken over the public recognize them as Buddhist schools. The admissions policy in such schools like Ananda or Visakha are best left to the School Development Society to determine. The area rule should not apply to them as it cannot square up with the religious character of the schools.

Muslims in Maradana may qualify to be admitted to Aananda College under the area rule and may be willing to give donations. But the parents may not like to admit them because they consider Ananda College a Buddhist school. So it is meaningless to have a rule that cannot be enforced. Would it not be better to abolish the area rule and allow the religions groups that lack schools to set up their schools and for the state to fund them to the same extent as the present state schools without the state having to fund the land and buildings. Many developed countries have state-funded private schools. The advantage is that the middle and lower middle classes will not then have to go to the international schools which they can’t afford.

The educational bureaucrats who are reluctant to abandon central planning insist that the principals should adhere to the area rule and check all the falsified documents. This means the principals have to be detectives and spend their valuable time to check on documentation. Such work economists say are ‘deadweight losses’ to the economy. The least that the government should do is to get the educational bureaucracy itself to check the documents and penalize those parents who have falsified documents by expelling their children subsequently. Why blame the principals unless there is proof of their taking bribes to overlook such falsified documents? A law that is violated by the majority cannot be enforced and is best changed.

Local management

One of the principles adopted in many countries is to introduce local management instead of centralized management by the bureaucracy. In Britain the schools are under the control of the Local Authority. Even then there is a Board of Governors elected by the parents. The teachers of course don’t like it because they would then be accountable for their work and conduct. As it is the teachers can act with no responsibility and accountable only to a distant bureaucracy in Colombo which can be influenced through local politicians to overlook their misdemeanours. . So attempts to give power to School Boards are vigorously resisted by teachers’ trade unions.

As the OECD in one of its reports "School: A matter of Choice" (1994) pointed out the state should confine itself to regulation instead of managing the schools even if they are fully state funded.